Markets

Heads of state in Russia and Germany have reacted angrily to sanctions imposed by U.S. President Donald Trump against building Nord Stream 2, the second 55 Bcm/year pipeline leg of the Baltic Sea interconnector. The sanctions target in particular the Swiss-Dutch pipe-laying firm AllSeas, which suspended works in anticipation.

The U.S. Energy Information Administration (EIA) has made it easier to access and use information by launching a State Energy Portal. When visualizing data for one state, users can add other states, regional, or weather data to make quick comparisons. They can also filter by data frequency, time period, geographic location, energy source, and sector.

For new gas pipelines, timing is everything. This especially applies to the new 38 Bcm/y ‘Power of Siberia (PoS)’ link that will elevate China to become Gazprom’s second largest export market. However, analysts say  considering the cost of transporting Russian pipeline gas over thousands of miles towards Beijing and Shanghai, it is unlikely that CNPC will want to quickly ramp up PoS gas supply at the expense of imported LNG.

Sales of electric vehicles in Germany have jumped 49 percent, with over 97,000 electric cars sold in the months up to December. Consumers increasingly embrace e-cars – not least as a means to shield against Berlin’s latest hike of the entry-level price for CO2 emissions in the transport sector, which has just been raised to 25 Euros per tonne from 2021.

Southern California Gas Company’s (SoCalGas) has managed to improve its gas supply flexibility going into December, just before demand will peak in the latter half of the month. Working gas inventory currently stands at 74.4 billion cubic feet (Bcf), and though that’s similar to last winter SoCalGas stressed it enhanced withdrawal volumes and speed from its large Aliso Canyon storage.

With the opening of the ‘Power of Siberia’ interconnector, Russia’s Gazprom has shifted its focus on its new Chinese offtaker CNPC who agreed to import 38 Bcm annually over the next 30 years under a deal worth some $400 billion. As for 2019, Gazprom says Chinese gas demand will rise 10 percent and “considerably exceed 300 billion cubic meters (Bcm).”

The December clearing price for carbon emissions under the Regional Greenhouse Gas Initiative (RGGI) scheme has reached a fresh record due to a tighter emission cap. RGGI, the first mandatory emission trading scheme in 10 U.S. northeastern states, has cleared its latest auction at $5.61 per short ton for the 13.1 million tons of CO2 allowances sold.

Shares of Saudi Aramco have spiked after a historic market debut, rising 10% above the initial public offer price. The Saudi government listed a 1.5% stake in Aramco at Riyadh’s Tadawul stock exchange – raising $25.6 billion which gives the oil giant a market valuation of around $1.88 trillion, and liquidity to invest in LNG trading and power gen projects.

The latest U.S. Government Short-Term Energy Outlook (STEO) anticipates natural gas production will grow much less in 2020 because of the lag between changes in price and changes in future drilling activity. Low prices in Q3-2019 is likely to reduce gas-directed drilling in the first half of next year, with 2020 output seen average 95.1 billion cubic feet per day (Bcf/d).

Germany’s structural shift towards e-mobility has been largely driven by governmental regulation and less by market forces, Deutsche Bank criticized. Without subsidies, e-cars are “still a niche”, analysts said, noting the technology is “a very expensive way of avoiding carbon emissions.”

Prices for Australian thermal coal remain on a downward trajectory amid oversupplied global markets and tepid demand – not least due to Europe’s rapidly falling coal-fired power production. In Asian markets, lower coal imports from South Korea and Taiwan adds further to the supply overhang, Morgan Stanley Research finds.

Three days ahead of the UK General Election on December 12, the Shadow Chancellor John McDonnell has pledged the Labour Party would kick-start the process of re-nationalizing Britain’s power and water companies within the first 100 days upon assuming office. Several UK utilities have already moved part of their ownership offshore to protect their assets.

Page 9 of 211

News in Brief

Zhonghua’s profits halve

April 1 – Hong Kong-listed Zhonghua Gas Holdings has recorded a staggering 46.7% fall in profit, citing a lower margin for LNG supplies and reduced subsidies, although full-year revenue rose by 7.3%. In December, Zhonghua partnered with Shanghai Shenergy to supply LNG in the Yangtze River Delta region, and also has strong business relationships with Tractebel Engineering and Tianjin Jinre Heat-Supply Group.

Endesa donates $28m to fight coronavirus

March 31 – Endesa has created a 25 million euros ($27.8 million) fund to help fight the coronavirus pandemic in Spain. The Spanish utility, subsidiary of Enel, said the fund will be designated for purchases of protective equipment for health-care workers.

 

MAN develops liquid methane terminal in Swedish port

March 30 – OxGas has commissioned MAN Energy Solutions to act as ‘owners engineer’ to develop and build a liquefied methane-based fuels terminal in the Swedish Port of Oxelösund. The terminal will feed both LNG and green methane derived from bio gas to SSAB ’s local steel production, and to re-distribute it via train and trailers to other parts of Sweden for use in the steel industry and decentralized power generation.

American ISOs to delay grid investments

March 27 – North America’s independent system operators (ISO) are considering delaying investments in grid upgrades and enhancement as electricity demand weakens due to industry shutdowns to contain the coronavirus pandemic. PJM Interconnection, the largest U.S. bulk power market which spans 13 Mid-Atlantic and Midwestern states, revised its daily forecast of about 100,000 MW of load but actual demand came in at 95,500 MW.

Wärtsilä starts combustion trials using ammonia

March 26 – The Finish technology group Wärtsilä has initiated combustion trials using ammonia in an effort to reduce emissions. Based on initial results, the tests will be continued on both dual-fuel and spark-ignited gas engines, followed by field tests in collaboration with ship owners from 2022, and potentially also with energy customers.

Xodus sees growth in cable services

March 25 – Xodus Group has stepped up services related to subsea power cables over the last twelve months. The number of new consulting assignments grew by more than 50%, resulting in more than 70 active work streams that are handled by more 30 permanent staff.

Electricity “more indispensible than ever”

March 24 – Disruptions caused by the coronavirus crisis lay bare how much modern societies rely on electricity, according to the International Energy Agency (IAE). Millions of people are mandated to stay home, causing a surge in teleworking, e-commerce and video streaming which pushes up domestic electricity use.

U.S. frackers cut Capex

March 23 – Sharp cuts in capital spending among Appalachian gas producers are now being replicated in other U.S. basis, with Energy Aspects anticipating the deepest impact on production and earnings to take place starting from the second half of 2020. So far, E&P companies just hedged 52% of this year’s expected production even though some Appalachian producers are seen “lock in some pure gas volumes at prices above the curve.”

EV makers face bankrupcy

March 20 – Electric vehicles (EVs) remain particularly exposed to the corona effect of supply-side constraints and demand erosion. Gigafactory facilities are likely to be delayed and fledging EV manufacturers could face bankruptcy, Wood Mackenzie warns. On the flip side, declines in EV sector demand may be gains for the stationary energy storage segment.

Manufacturing rebounds in Asia

March 19 – Asian-dominant supply chains for solar and energy storage are gradually rebounding after contractions in February. Moving forward, Wood Mackenzie expects near-term development activity and local logistics in leading European and North American markets will outweigh lingering supply issues.

Italy’s gas demand plunges

March 18 – Corona-struck Italy has seen demand for natural gas plunge 8% from the previous week, with similar declines likely in other EU countries as national governments impose lockdowns to contain the virus. Industrial demand is “particularly volatile,” while gas generators will bear the brunt of demand loss, Wood Mackenzie says, as a carbon price decline is bolstering thermal coal.

Nexif raises funds for Rayong CHP

March 17 – Nexif Energy, a joint venture between Singapore-based Nexif and Denham Capital, has raised project financing for the Rayong gas-fired cogeneration project in Thailand. The 92 MW plant is being developed project with Ratch Group, based on 25-year power purchase agreement with Electricity Generating Authority of Thailand (EGAT).

ADB provides $10m loan for Afghan IPP

March 16 – The Asian Development Bank (ADB) has agreed to provide $10 million in debt financing for a gas-fired power unit in Mazari Sharif with a capacity of nearly 60 MW. Phase-1 of the Independent Power Project (IPP) will get another $10 million loan from the Leading Asia's Private Sector Infrastructure Fund (LEAP).

IEA models 50% Carbon-Free Generation

March 13 – Analysts at the U.S. Energy Information Administration (EIA) have drawn up the 50% Carbon-Free Generation case - assuming a stark shift in state-level policies. In this event, the U.S. would have 19% more nuclear power generation, 10% more wind power and 17% more solar PV contribution than in its Annual Energy Outlook 2020 (AEO2020) reference case.

E-charging market to top $15bn by 2030

March 12 – By 2030, the U.S. market for energy-optimisation in support of charging electric-vehicles could be worth $15 billion per year, McKinsey finds. The consultancy expects high demand for home-charging appliances as residential power tariffs are comparatively cheap and most charging can happen overnight when off-peak electricity prices are lower.

Oversupply builds up

March 10 – Energy Aspects’ end-March forecast has added on another 100+ billion cubic feet of natural gas supply while demand remains subdued. In the U.S., the seasonal decline in heating degree days nearly halved the natural gas withdrawal rate. Gas-burn in the power sector and residential/commercial demand are forecast to fall by 1.7 billion cubic feet per day (bcf/d) and 4.0 bcf/d, respectively.

Small-scale LNG cuts cost for power plants

March 10 – Decentralized gas power plants in remote locations can source cheaper fuel from small-scale LNG regas terminals than from trucking the super-chilled gas across long distances. “Trucking LNG further inland would entail additional costs as well as logistical challenges,” IEA analysts noted. For example, a 100 MW baseload power plant would require, on average, around 20 daily deliveries from tanker trucks.